Buying or leasing commercial real estate is one of the most important steps a company can take to start or expand their business. Because purchasing or leasing commercial real estate is such a large part of a company’s growth, if conflict occurs relating to this transaction, many businesses may need a commercial real estate litigation attorney to resolve a dispute that is threatening their financial future. Thus, because real estate litigation can occur in many different instances, real estate litigation can be used by and against, property owners, property purchasers, two parties that jointly own a property or are looking to jointly purchase a property, real estate agents and brokers, landlords, and tenants.
Furthermore, real estate litigation is extremely complex. The reason for this is that this legal issue involves many laws, legal rights, and government policies. Finally, commercial real estate litigation attorneys attempt to resolve these issues and pursue or defend their clients against litigious claims.
Most Common Causes of Commercial Real Estate Litigation
Commercial real estate litigation can occur in many situations. However, the most common causes of commercial real estate litigation are breach of contract, commercial real estate finance disputes, commercial lease disputes, negligence or breach of duty, specific performance, boundary disputes, real estate partnerships or joint venture disputes, real property insurance disputes, and land use disputes.
Breach of Contract
A breach of contract—for both sale or lease contracts—is the most common reason why commercial real estate litigation occurs. In any real estate transaction, the terms and conditions of a contract will include specific details focused on the closing date, title clearance, assets included in the transactions, or if a rental property, details relating to the security deposit and other aspects of the lease. In a commercial real estate litigation lawsuit, the plaintiff—the person who was financially damaged in the contract—will claim a breach of contract and must prove that they fulfilled their contractual duties. Additionally, the plaintiff must show that the person who inflicted the damages—the defendant—did not uphold their contractual obligations. If this level of proof is met, the plaintiff will typically be able to receive compensation. This compensation can match or even exceed their financial losses due to the breach of the contract.
Commercial Real Estate Finance Disputes
Commercial real estate finance disputes can occur during purchase and sales, escrow disputes, specific performance, rescission and fraud claims, secured loans such as foreclosure actions, lender liability, bad-faith lender claims, and inter-creditor disputes. Real estate finance disputes can be devastating to the company looking to expand their real estate footprint. While not always avoidable, a business can mitigate these issues by hiring an attorney to review any documents or contracts that they receive form lending institutions. Furthermore, our group of commercial real estate attorneys have worked on these types of disputes for developers, lenders, landlords, tenants, real estate investment trusts, and other financial services.
Commercial Lease Disputes
Commercial lease disputes can affect both commercial landlords and tenants. However, although these disputes affect both parties in this transaction, the laws dictating commercial lease disputes are extremely complex. With over 20 years of experience working with both commercial landlords and tenants, our group of real estate attorneys has the knowledge required to assist clients with a wide range of issues including: termination and option disputes, right of first refusal disputes, complex operating expense disputes and fair market rent reset arbitrations.
Negligence or Breach of Duty
This cause of real estate litigation most commonly occurs between a property buyer or seller and their real estate agent. In most contracts, real estate agents or realtors are legally required to act in the best interest of their clients. Additionally, they cannot act in the interest of the seller or another third-party. Furthermore, realtors and real estate agents are obligated to keep private, sensitive, or other financial details of their clients confidential.
A realtor or real estate agent must also disclose any information that may be beneficial to their client. This includes informing their client of comparable purchase or rent prices or anything that could help their client. Furthermore, an agent or realtor must perform their duties and use their knowledge of the case to the best of their abilities. Showing negligence in any of these matters will likely lead to financial losses or other disadvantages to their clients. If this occurs, the client will likely be able to sue their realtor or real estate agent.
Realtor and real estate agent negligence is based upon the actions of other people in the profession. Thus, if a reasonable realtor or real estate agent would not have performed a certain duty or would have done that duty in a drastically different manner and completing this duty occurred in a financial loss for the client, negligence occurred.
Specific Performance Matters
When you are in a commercial real estate contract and do not perform an action that the contract specifies, the other party may file specific performance. Specific performance is a court order where the party who broke the contract is forced to comply with their duties outlined in the contract. The specific performance remedy requires taking an objective approach on the language of the contract. Since the remedy is requiring the breaching party to perform the specific terms of the contract, it is important to know exactly what those specific terms imply.
Boundary Disputes
Boundary disputes occur when a party does not correctly register their property. This issue can also occur if someone uses a practical property line instead of the legal one. This can occur when your neighbor, their property, or their pets invade your property. Thus, when you purchase a property or someone buys a property next to you, you should have an attorney research the legal property lines so that you do not encounter any legal issues.
Estate Partnerships or Joint Venture Disputes
Many business structures such as limited liability companies commonly partake in commercial real estate transactions. No matter what type of business you run, our group of attorneys assist clients with real estate issues involving company dissolution, participation rights, and termination and management rights. Many of these issues occur between parties that have personal relationships. Thus, we strive to avoid traditional litigation. Instead, we seek to resolve these issues through a form of alternative dispute resolution such as mediation and arbitration.
Real Property Insurance Disputes
Insurance is a key aspect of any piece of commercial real estate. This is true for landlords insuring there property or tenants insuring there merchandise or property within their leased property. Our group of real estate litigation attorneys represent clients in matters involving title, property, and casualty insurance claims. Furthermore, we also work with clients to help them receive benefits from loss of income insurance when any event occurs that stops them from operating.
Other Causes of Commercial Real Estate Litigation
The most common causes of commercial real estate litigation are from the issues discussed above. However, lawsuits can occur in the following situations.
- Breach of construction contracts or terms
- Title disputes/defects of title
- Foreclosure issues
- Mortgage disputes or default (including foreclosure)
- Condominium issues (e.g., conflict between condo boards and owners, or between condo association and management company)
- Breach of development agreements
- Misrepresentations in connection with the purchase or sale of real estate
- Disputes involving easements or adverse possession, including quiet title actions
- Water rights
- Land use disputes
- Negligent design, planning or construction
- Environmental and compliance issues, including cases involving indoor air quality
- Insurance disputes
- Physical damage to real estate
- Inverse condemnation against a governmental entity for taking real property
- Cell phone tower litigation
- Tenant default
Alternative Ways to Handle Real Estate Litigation
If you are engaged in a real estate dispute, you do not have to use litigation to resolve your issue. Instead, you could seek to use a form of alternative dispute resolution such as arbitration or mediation. In arbitration, the two disputing parties must pick and then agree on one or multiple arbiters. These arbiters will have the ability to decide who wins the case. Conversely, in mediation, instead of a judge ruling on the case, a neutral third party called the mediator resides to hear the case and works to facilitate discussion and negotiation between the parties
Final Thoughts
With over 20 years of experience, Antonoplos & Associates commercial real estate attorneys have the knowledge and experience required to assist clients with real estate litigation in DC, Maryland, and Virginia. Furthermore, because our attorneys have a strong background in real estate, construction law, and business law, we are uniquely equipped to assist clients with real estate litigation. Finally, we are able to help you before, during, and after your real estate litigation with a wide range of commercial legal issues.
Contact our DC Law Office for More Information
Finally, for more information regarding commercial real estate litigation, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys. Additionally, for general information regarding real estate law, check out our blog.